The Employment Appeal Tribunal’s (EAT) decision in Micro Focus v Mildenhall provided clarification on the European Court of Justice (ECJ) decision in UQ v Marclean: namely that Marclean does not require employers to look both ‘backwards and forwards’ across a 90-day period when deciding whether collective consultation obligations are triggered.
The EAT clarified that the duty under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A) is a forward-looking question of fact, based on the number of employees that an employer was actually planning to make redundant at the moment in time that the redundancies were ‘proposed’. Click here for our key takeaways for employers.
Background
Under TULR(C)A, employers must hold a collective consultation with employees when they propose to make 20 or more redundancies within a 90-day period. Although Marclean is an ECJ decision, it pre-dated the end of the transition period following Brexit, meaning it remains binding EU case law authority on the Directive that TULR(C)A derived from.
Mr Mildenhall (the Claimant) was employed by Micro Focus Ltd (the Respondent) from 1 December 2015 until his dismissal for redundancy in July 2022. He subsequently brought claims for unfair dismissal and for a protective award, arguing that the Respondent had failed to collectively consult because it had proposed to make 20 or more redundancies within a 90-day period.
Employment Tribunal (ET) decision
The Employment Tribunal (ET) followed a number of previous ET decisions and held that the Marclean case meant that an employer proposing redundancies must look both backwards and forwards for 90 days to determine whether the number of proposed redundancies exceeds 20, so collective consultation was triggered in this case.
It also held that the threshold of 20 employees was satisfied because the Respondent acted as the ‘de facto’ employer for all UK staff and was therefore responsible for individuals employed by other legal entities within its group.
The ET concluded that the Claimant had been unfairly dismissed due to the lack of proper consultation and granted him a protective award of 90 days’ pay.
Employment Appeal Tribunal (EAT) decision
The EAT held that the dismissal was unfair as the consultation undertaken was inadequate and another employee should have been included within the redundancy pool.
However, it accepted the Respondent’s arguments that the ET had misdirected itself in its interpretation of Marclean.
The EAT clarified:
- The ECJ decision does not require tribunals to look both backwards and forwards when deciding whether 20 or more redundancies had occurred within 90 days for the purpose of triggering the duty to collectively consult under TULR(C)A.
- Instead, this duty is triggered prospectively when an employer ‘proposes’ to dismiss 20 or more employees within 90 days, regardless of the number of dismissals which eventually materialise. The decision in Marclean did not affect the interpretation of the term ‘proposing’ as set out in TULR(C)A.
Furthermore, the ET had erred in applying the ‘de facto’ employer approach. The duty under TULR(C)A is owed by the employer to individuals who they have a contract of employment with. Therefore, only redundancies proposed by the same employer should be taken into consideration. Employees of other group companies, even if closely connected, are not relevant.
The EAT therefore remitted the issue of collective consultation back to the ET.
Key takeaways
The EAT’s decision provides important guidance:
- The collective consultation obligations under TULR(C)A do not require combining past and future redundancies when assessing the 20-employee threshold.
- Instead, the duty to collectively consult arises when, at a given point in time, an employer proposes to dismiss, within 90 days, 20 or more employees with whom the employer has a contract of employment.
- For clarity, it does not matter whether 20 or more redundancies actually occur within those 90 days. What matters is what the employer was considering (or ‘proposing’) to do at the relevant time, not how many dismissals were in fact effected or proposed when matters are viewed retrospectively.
However, the EAT also warned that tribunals should scrutinise employers’ actions to prevent avoidance tactics. Therefore employers should be cautious with regard to strategically planning redundancies (for example, by staggering redundancies so that the threshold is not reached within a 90 day period) as this case suggests that such action would still be scrutinised.
Whether the duty has been breached remains a question of fact. If an employer’s actions indicate that they were, at some stage, proposing the threshold number of dismissals, then a tribunal can find that the duty to collectively consult applies. What happens subsequently can often be very relevant evidence as to what the employer was ‘proposing’ in the past.
In light of all of the above, it can therefore still be good practice for employers to collectively consult even if they do not have to: it can help minimise their risk of later being subjected to an unfair dismissal claim where the number of proposed redundancies is close to or might reach 20.